Merkle Tree (Blockchain Hash Tree)

What is a Merkle Tree?

A Merkle tree, also known as a hash tree, is a data structure used in cryptography, blockchains, and some cryptocurrencies to verify the integrity of data elements within a larger data set.

Merkle trees consist of blocks of data, each of which is converted into a unique hash. The individual hashes are then paired and hashed again, a process known as concatenation. This process continues until only a single hash, the Merkle root, remains.

The root provides a single point of reference for the entire dataset.

Techopedia Explains

Tree structures are hierarchical data structures that have a parent-child relationship between nodes.?Over time, putting a tree’s roots at the top of a diagram has become a standard way to represent tree structures in computer science.

The reason for the upside-down orientation can be attributed to historical conventions in diagramming. For example, many hierarchical representations, like organizational charts, are naturally read from top to bottom.

How Merkle Trees Are Created

Merkle trees are constructed using cryptographic hash functions that convert input data into fixed-size character strings called hashes. Each hash in the tree represents a specific data element or a block of data elements.

As the tree is built upwards from the base (leaf level of the tree), each subsequent hash represents a combination of the parent’s children hashes, until the topmost hash, the Merkle root, effectively represents the entirety of the input data.

To construct a Merkle tree, the entire dataset is first divided into smaller segments called blocks. If there isn’t an even number of blocks, the last block is duplicated to achieve parity. Each block is then assigned a hash, which becomes a leaf node on the tree.

To establish the tree’s hierarchy, two neighboring leaf node hashes are combined (concatenated). The concatenated pair is then hashed to produce a parent node that resides above the two original leaf nodes.

The process of pairing and hashing continues layer by layer, moving up the tree until only one hash remains at the top. The final hash, known as the “Merkle root” or “root hash,” summarizes the entire dataset.

How Merkle Trees Are Used For Data Verification

Merkle trees allow specific data items that are part of a large dataset to be verified quickly and efficiently by inspecting a subset of the tree’s hashes. Essentially, the process involves checking the path from the data block in question to the Merkle root.

Here is a simplified breakdown of the verification process:

• Begin the verification process by locating the hash of the specific data block to be verified.
• Move up the tree. At each level of the tree, locate the adjacent (sibling) hash to the current hash, concatenate (combine) it with its sibling, and hash the resulting combination.
• Compare the newly computed hash with the parent node hash in the tree. If there’s a match, continue the process until the Merkle root is reached.

As long as the newly computed hashes match the parent node hashes in the original tree, the integrity of the specific data block in question can be verified.

(Any alteration in the data would cause discrepancies in either the path hashes or the Merkle root.)

The Role of Merkle Trees in Blockchains and Bitcoin

Merkle trees are useful for checking for inconsistencies and validating?blockchains.

By organizing transaction hashes into a Merkle Tree, any blockchain node can quickly and efficiently verify whether a particular transaction exists within a block. This structure also helps ensure the integrity of the data in a specific block because if even a single transaction changes, the Merkle root (the top hash of the tree) will also change and make inconsistencies detectable.

In the Bitcoin protocol, when a new block is added to the blockchain, each block includes the Merkle root of a Merkle tree in the header. This automatically creates a “proof-of-inclusion” for each Bitcoin transaction.

Proof-of-inclusion is a way of demonstrating that a specific transaction is part of a block without having to reveal or check all the transactions in that block. This proof is especially crucial for lightweight SPV (Simplified Payment Verification) wallets that don’t download the full blockchain to verify transactions.

Merkle trees also play a role in “proof-of-reserves.” Proof of Reserves is a method used by cryptocurrency exchanges and wallet providers to prove that they hold sufficient funds to cover the balances of their customers.